The following banks and their clients will be honoured at our eighth annual awards dinner in Sydney on February 1. The dinner will be held at our signature venue — the harbourkitchen&bar at the Park Hyatt. For more information on this event, please contact Vicki Shaw at [email protected] or (02) 9437 3070.
HOUSE AWARDS
BEST LOCAL COMMERCIAL BANK
ANZ
ANZ wins our Best Local Commercial Bank award for its client-centric focus and its product innovation. The bank continues to build on its ties with Asia and is now successfully using its relationships in the region to open doors for its customers. Several of the loans that it syndicated during the year had allocations of greater than 40% to Asian accounts. To raise the profile of local borrowers, it took 13 Australian companies on non-deal roadshows through the region. ANZ also did well in cash management, and improved its market share in trade finance, now claiming to control 28% of the Australian institutional market. It re-launched its structured trade finance business and struck some innovative deals, including a warehouse finance repurchase facility for grain company Emerald Group.
BEST FOREIGN COMMERCIAL BANK
Citi
A perennial favourite in this category, Citi is still the biggest and most active foreign bank in Australia. The market has also become a top performer for the bank, accounting for the highest year-on-year revenue and net income growth at Citi Asia in 2010, and the second highest globally. It remains an active arranger of Samurai bonds for Australian issuers, and is also strong in the US 144A/Reg-S and euro markets. 2010 saw its cash management team pick up new mandates from corporations as well as white-labelling and outsourcing deals for local banks. Citi is also making strides in its new export agency business, arranging finance for well-known airlines looking to add to their aircraft fleets.
BEST INVESTMENT BANK
UBS
UBS is hard to beat when it is involved in the largest IPO of the year (QR National, A$4.05 billion), the largest block trade (Woodside, A$3.3 billion), the largest LBO (Healthscope, A$2.7 billion) and several key M&A deals (Arrow Energy/Shell, Centennial Coal/Banpu and Intoll/CPPIB). Its performance in the equity market in 2010 was a standout, with the bank raising over A$5 billion more than its nearest competitor. And it continues to innovate, recently structuring a 100% equity credit hybrid for Santos. Outside of these headline origination activities, the firm remains a strong player in equities trading and research, bond arranging, fixed-income trading, derivatives and prime brokerage.
BEST INVESTMENT BANK – NEW ZEALAND
First NZ Capital
In a quiet year for New Zealand’s capital market, First NZ Capital stamped its name on some of the most notable deals. The firm jointly ran a NZ$126 million entitlement offer for Auckland Airport, marking the first time that an accelerated structure was employed; and the NZ$147 million bond transaction for Greenstone Energy received broad support for an inaugural issuer. On the M&A side, First NZ Capital orchestrated a life-saving merger of three savings banks by advising on the tie-up of CBS Canterbury, MARAC Finance and Southern Cross Building Society to create a “Heartland Bank”. First NZ’s strategic alliance with Credit Suisse remains an important part of its formula for success.
ISSUER OF THE YEAR
Fortescue Metals
As Australia rides a new mining boom, it seems fitting to award a resources company with the gong for issuer of the year. The company is a relative newcomer, with only two years of operational history, but has quickly become the country’s third largest iron ore producer and exporter, and a significant supplier to the steel mills in China. In October, Fortescue moved a step closer to full maturity by changing from a secured project finance capital structure to an unsecured corporate capital structure. First it arranged a $2.04 billion senior credit facility that was used to refinance its existing senior notes, and then it repaid the credit facility with new corporate style high-yield bonds. The bond transaction was a startling success, with the order book growing at an unprecedented rate and surpassing $10 billion before price guidance was released. Fortescue used the wall of demand to drive an exceptional outcome on price and terms. We look forward to seeing what it does next, as the company moves from new-kid-on-the-block to mining powerhouse.
BEST EQUITY HOUSE
UBS
With a market share of close to 30%, it was hard to get near UBS in the equity markets this year. The Swiss bank executed 27 transactions and underwrote 19 deals, of which 12 were done on a sole basis, including issues for Nufarm, Transurban, Boral, and the whopping A$3.3 billion block trade for Woodside. The Swiss bank excelled in initial offerings and follow-ons, working on the IPO for QR National (Australia’s second largest IPO ever) and on a string of successful jumbo placements and rights offers. Most recently it structured a 100% equity-credit hybrid for Santos, a first in the market, and testimony to its ability to provide unique and innovative ECM products.
BEST M&A HOUSE
Goldman Sachs
In a neck-and-neck race with rival UBS, Goldman Sachs receives this award for its involvement in several successful deals that also made the short-list for our Best M&A Deal category. In the 11 months to end-November, it advised on 33 deals with a value of $20.1 billion. Goldman got a good price for its client Healthscope on the A$2.7 billion acquisition by TPG and Carlyle, and the firm was also involved in another notable private-equity transaction this year -- Providence’s purchase of Study Group from CHAMP. Goldman has maintained a nice mix of buy- and sell-side mandates, and heads into 2011 with a strong line-up of active deals. Although, in this regard, UBS also has a healthy pipeline.
BEST LOCAL BOND HOUSE
Westpac
This was another hotly-contested category with last-year’s winner Westpac fending off a valiant performance by team ANZ. In the end, we chose Westpac for its tried and tested deal-making formula, which put it on top of Dealogic’s Australian dollar DCM bookrunner ranking in the year to end-November. In 2010, Westpac bought a number of inaugural issuers to the domestic capital markets, including Adelaide Airport, Sydney Airport, Arab Bank Australia and SPI AA. Our judges particularly liked its joint lead manager role in the A$4 billion November 2014 deal for Queensland Treasury Corporation. This deal priced in January and was the first to opt out of the federal government guarantee put in place after the financial crisis. QTC initially planned to print up to A$3 billion, but upsized the deal following strong demand.
BEST INTERNATIONAL BOND HOUSE
J.P. Morgan
J.P. Morgan’s credentials as the best arranger of foreign currency bonds for Australian issuers were firmly established in 2010. The bank’s execution expertise spans US dollar, euro and sterling, though admittedly its biggest successes this year were in the US dollar market. Scanning J.P. Morgan’s deal list, our judges liked the debut 144A bond offerings for Goodman, Sydney Airport and Asciano, and Woolworths’ first trip back to the US markets since 2005 . We also awarded the $2.04 billion five-year senior note deal for Fortescue Metals as our favourite international bond. As J.P. Morgan’s offering goes from strength to strength it will prove hard to beat.
BEST DEBT FINANCE HOUSE
ANZ
This is the second year running that we have proffered this award, in recognition of a bank’s strength in disciplines such as securitisation, structured finance, and project and trade finance. In 2010, the bank with the strongest showing in debt finance was ANZ, which featured either at the top, or near the top, of the relevant league tables. The bank led securitisation deals across all three asset classes and was a bookrunner on twice as many loan syndications as its nearest competitor. In the area of project and structured trade finance it closed over 40 deals with a total value in excess of A$40 billion. It was also instrumental in our Best Project Finance Deal award to the Collgar Wind Farm transaction.
BEST BROKERAGE HOUSE
UBS
UBS maintains its number one position in secondary trading, enjoying a market share of 10.2% over the past five years. Between January and end-November, the bank executed more than 37 million trades totalling A$290 billion. Its trading capabilities are supported by an award-winning equities research team that covers 270 stocks, or 97.5% of the ASX200 market. In May this year, the bank poached top-rated insurance analysts James Coghill and Scott Olsson from Deutsche Bank, adding to its financial services sector coverage. UBS is also a leading innovator in broker IT, introducing a dark pool and market leading algorithms.
BEST FINANCIAL LAW FIRM
Mallesons
With a focus on market regulation, the energy and resources sector, and outbound investment from China, Mallesons maintains its position as a leader in financial legal services. The firm’s banking and finance practice is run by over 200 lawyers who regularly win praise from clients for helping to optimise opportunities and manage risk. In 2010, Mallesons advised on some of the largest and most complex deals, including Carlyle/TPG’s acquisition of Healthscope; CIBC’s inaugural covered bond in the Australian market; the IPO of QR National; and CPPIB’s bid for Intoll. In the pipeline are several other large transactions such as AXA’s proposed merger with AMP, and Westfield’s new retail trust.
Correction: In the Deal Achievement Awards 2010 – Australia and NZ announced on this website yesterday (December 16) we published an incomplete list of arrangers for the Best Debt Finance Deal which was awarded to Carlyle and TPG’s acquisition financing for Healthscope. In fact, the mandated lead arrangers on the deal were: ANZ, Bank of America Merrill Lynch, Barclays Bank, BNP Paribas, Commonwealth Bank of Australia, Credit Agricole CIB, Credit Suisse, Deutsche Bank, HSBC, Macquarie, Mizuho Corporate Bank, Natixis, Sumitomo Mitsui Banking Corporation, Societe Generale, UBS, United Overseas Bank, and Westpac. The awards announcement has been updated to reflect this.
Today we announce the winners of the Best Deals for 2010 in Australia and New Zealand. Tomorrow we will publish our Best House award winners.
The following banks and their clients will be honoured at our eighth annual awards dinner in Sydney on February 1. The dinner will be held at our signature venue — the harbourkitchen&bar at the Park Hyatt. For more information on this event, please contact Vicki Shaw at [email protected] or (02) 9437 3070.
DEAL AWARDS
BEST IPO
QR National, A$4.05 billion
Credit Suisse, Goldman Sachs, Merrill Lynch, Royal Bank of Scotland, UBS
If it hadn’t been for the Queensland government’s partial sale of its railroad assets in November, Australia’s equity capital markets would have had a luckless year. As it stands, the market will record its lowest full-year volume (in terms of funds raised) for five years. Not surprising then that QR National was a welcome deal. It receives this award for its size and steady execution, which involved a roadshow that saw management meet with 40 brokers and 300 institutional investors in 15 cities over five weeks. The shares were offered in a range between A$2.50 and A$3.00 each, and priced at A$2.55 with an institutional book that was 1.6 times covered. Despite some negative sentiment towards the deal, retail investors ultimately bought A$1.3 billion worth of shares. The stock has traded well since listing.
BEST SECONDARY OFFERING
Woodside Petroleum, A$3.3 billion sell-down
UBS
Markets tend to get nervous when a controlling shareholder offloads a large stake in a company, but the sell-down by Shell of a A$3.3 billion stake in Woodside was one of those awe-inspiring deals that any ambitious banker would be pleased to have on their scorecard. Representing about 10% of Woodside’s issued capital, the sale to local and foreign institutions of 78.34 million shares was the largest block sale in Australian corporate history. The deal was executed with no pre-sounding or cornerstone investors, and priced at a 7.9% discount to Woodside’s last close, despite a 5.2% increase in the share price in the week prior to launch. For UBS to do this as sole underwriter is a feat worth applauding.
BEST EQUITY-LINKED DEAL
QBE, $850 million zero-coupon convertible bonds
Merrill Lynch, Royal Bank of Scotland
QBE is a repeat issuer in the equity-linked market and its successful placement of zero-coupon senior convertible securities in April this year is testimony to its savvy. This was a big deal: the size increase to $850 million from $700 million made it the largest CB out of Australia in five years. Demand was generated during a four-hour accelerated bookbuild with most of the orders coming from top-tier hedge funds. The CBs priced at the investor best end with a conversion premium of 30% and a yield-to-maturity of 2.5%. They have a final maturity of 20 years with several call and put options along the way. Not typical for convertible transactions, the deal was fully underwritten by Merrill Lynch.
BEST M&A DEAL
Newcrest Mining acquisition of Lihir Gold, A$9.5 billion
Advisers to Newcrest Mining: Lazard, Merrill Lynch
Advisers to Lihir Gold: Greenhill Caliburn, Macquarie
The advisers to Lihir Gold managed to lift Newcrest Mining’s initial offer by a handsome A$1.5 billion before shareholders voted in August to approve the takeover. Greenhill Caliburn and Macquarie were able to create competitive tension by keeping the auction process going after the announcement of the recommended offer, allowing parties that had already commenced due diligence to retain access to the data room. This is almost unheard of in the Australian M&A market. In the end, Newcrest paid a 67% premium to Lihir’s pre-bid market value. The seller was also able to navigate the uncertainty created by the federal government’s planned implementation of a resources super profits tax, which was later watered down to exclude gold producers.
BEST LOCAL BOND DEAL
APA Group, A$300 million 10-year bond
ANZ, National Australia Bank
Australia’s first 10-year corporate bond issue was seen by investors as a milestone. In a market dominated by financial borrowers, and where corporates usually go offshore for their funding, the A$300 million deal by gas pipeline investor APA Group prompted many to trumpet that an active local bond market for companies might soon be blooming. APA is rated BBB/Baa2 by Standard and Poor’s and Moody’s and priced its bonds at 240bp over the swap rate. The deal was upsized from an initial target of A$200 million and didn’t include covenant compensation in the form of a step-up margin. A total of 13 investors participated, with nearly all of the bonds placed with domestic accounts.
BEST INTERNATIONAL BOND DEAL
Fortescue Metals, $2.04 billion five-year senior notes
J.P. Morgan, Royal Bank of Scotland
The wall of demand that chased Fortescue Metals’ five-year non-call-two note issue in October gave the company a chance to drive an exceptional outcome on price and terms. Preliminary pricing on the offer indicated 8%, but the joint bookrunners soon revised this to 7%-7.125%, and then priced at the tight end. The offering was marketed during an intense two-team, week-long roadshow that was curtailed in favour of calls and group meetings once the depth of the book was determined. J.P. Morgan and RBS built an order book of $14.5 billion from 420 accounts. The new corporate-style unsecured notes have replaced existing project-style secured notes, giving Fortescue much needed flexibility to pursue new developments.
BEST DEBT FINANCE DEAL
Carlyle and TPG’s acquisition financing for Healthscope, A$1.55 billion
ANZ, Bank of America Merrill Lynch, Barclays Bank, BNP Paribas, Commonwealth Bank of Australia, Credit Agricole CIB, Credit Suisse, Deutsche Bank, HSBC, Macquarie, Mizuho Corporate Bank, Natixis, Sumitomo Mitsui Banking Corporation, Societe Generale, UBS, United Overseas Bank, and Westpac.
The A$1.55 billion senior credit facility arranged for the acquisition of hospital operator Healthscope was the first real sign of a resumption in private-equity activity in the Australian market. The A$2.7 billion purchase by the Carlyle Group and TPG Capital was the largest leveraged buyout since 2007. At 4.55 times senior leverage, a large amount of debt was needed in a tight borrowing market but the arrangers managed to secure the funding in a short timeframe and deliver certainty for the final bid. The transaction was completed during the middle of the European sovereign credit crisis, but still the initial bank syndicate comprised 17 lending institutions.
BEST PROJECT FINANCE DEAL
Collgar Wind Farm, A$478 million
ANZ, Commonwealth Bank of Australia, National Australia Bank, Westpac, West LB
As the largest wind project under construction in Australia, the Collgar Wind Farm in Western Australia will provide a significant level of renewable energy generation. The involvement of the Danish export credit agency EKF was an important factor at a time when local bank liquidity was constrained. The EKF debt tranche, at some 19 years, also partly mitigates the financing risk. While the deal took a lengthy 20 months to reach financial close, it demonstrates the level of persistence and lateral thinking required to get such critical infrastructure projects funded. ANZ acted as the export credit agency (ECA) arranger, the facility agent and the security trustee, and worked with four other banks as lead arranger on the commercial bank loan facility. Investec acted as developer and facilitator on the project.
MOST INNOVATIVE DEAL
Santos, €1 billion hybrid
Deutsche Bank, UBS
When Santos decided to tap the European capital markets for the first time, it didn’t do it in half measures. With its €1 billion 60-year subordinated step-up notes, it became the first Australian corporate to issue into the European hybrid market and also the first with a 100% equity credit from rating agency Standard & Poor’s. Santos initially sold €700 million worth of notes but then executed a €300 million tap following a reverse enquiry. Key innovative features of the notes include their long term, mandatory deferral of interest in certain circumstances and a replacement capital covenant in favour of certain senior financiers. The standout feature, though, is that the notes will be treated as debt for accounting and tax purposes, but receive 100% equity credit by S&P for rating purposes.
BEST NEW ZEALAND DEAL
Merger of CBS Canterbury, MARAC Finance and Southern Cross Building Society
First NZ Capital
The merger of two struggling building societies with the country’s largest finance company will hopefully set these grass-roots New Zealand lenders on the path to prosperity. The merged entity – referred to colloquially as Heartland Bank – has NZ$280 million of shareholders’ equity and NZ$2.2 billion of assets. It creates a nationwide financial services group with more than 360 staff and 69,000 active customers. First NZ Capital advised the merged parties on the structuring, valuation and implementation of the transaction and had to orchestrate approval from depositors, debenture holders and bondholders. In its re-birthed form, the group should be able to meet new minimum capital requirements and can move on to its next challenge of obtaining a registered bank licence.
